Reading file 12

Background

The psychology of pricing

As you drive along the west coast of store that only carries one of its
the USA, you can’t fail to notice the most expensive handbags worth five
99 Cents Only stores. This is for two thousand euros. The reason? Because
reasons: One is because there are a lot they don’t expect anyone to buy it.
of them. 1 The story behind Customers have no idea what the real
the 99 Cents Only stores begins in the price should be for such an item but
early eighties. Its founder, David Gold, they see that everything else is within
ran a liquor store in Los Angeles. He their price range. 4 Even in
had some boxes of cheap wine he online shopping, it’s been demonstrated
wanted to get rid of so put them outside that customers spend more at a website
the store with a sign saying ‘ninety-nine with a background of small pennies
cents a bottle’. Within less than a day than a background of clouds.
all the wine had been sold. The fact that A more modern example of how
some of the wine had originally been telephone companies continually baffle
sitting on his shelves for some time the consumer with price is through
priced at only seventy-nine cents, made the ‘bundling’ of services. Our mobile
it doubly surprising for Gold. phones provide so many different
2
In 1982 Gold opened a services nowadays that we receive
shop where everything was ninety-nine bills with an endless list of prices,
cents. On its opening day he sold TVs surcharges, and add-on fees. By putting
for ninety-nine cents. The store slogan them all together like this, the company
was ‘Open 9 days a week’. Now, thirty knows customers can’t be bothered
years later, David Gold is a millionaire, to trawl through and check if they are
there are well over 200 of these stores getting the best deal possible.
(along with many other imitators) and Still think you can’t be fooled? Well,
they still have special offers, such as what about that product you have
iPod nanos for 99 cents to the first nine faithfully bought year after year? Imagine
customers. it is your favourite brand of ketchup
So what is it about the magic number and one day it appears on the shelf in a
‘9’? 3 In his book Priceless newly designed bottle. It even has a new
and on his blog, the journalist, William kind of top that squirts the ketchup in a
Poundstone, cites many more examples different way. Perhaps the reason for this
of the power of 9 as he explores the change in design is to make your eating
psychology of shopping. Take iTunes. experience even greater. 5 In
Long before Apple supplied music, fact, the most likely reason is that they
people happily downloaded it for free. are selling you less ketchup for the same
Now they prefer to pay 99 cents per price. You can do this particularly well
download instead. with bottles by enlarging the dimple at
Poundstone has also found numerous the base. It’s an old trick that magicians
other examples of where marketers have used for years – distract the
succeed in prompting us to pay a price observer from what’s really going on by
by tapping into our subconscious. drawing their attention elsewhere.
For example, take the luxury fashion

© Oxford University Press 2017 Business Result Second edition Advanced

 Reading file 12
Exercises
1 Discuss as a class.
1 When choosing a product, what affects your decision the most? Packaging?
The brand? The price?
2 How do you know if you are getting a good price? What can you do to check?

2 Read the text and match these sentences to gaps 1–5 in the text. There is
one extra sentence.
a Then of course there’s also our favourite drink which we are prepared to pay
five times more for in a fancy hotel than from our local supermarket.
b It seems to be a number that makes people buy products they wouldn’t
normally.
c Most people don’t even realize they are spending more than they need to.
d It was a life-changing moment.
e Perhaps they have changed the ingredients but want to reassure you that you’ll
still enjoy the taste.
f The second is that most of us take extra notice of any price ending with the
number nine.

3 Read the text again and answer these questions.

1 Why do luxury shops have an item that normal people won’t buy?
a Because it makes everything else look affordable.
b In case one rich person does come in and buy it.
c To make them feel they are in a place where rich people shop.
2 What is bundling?
a When you break each service down into separate prices.
b When you offer discounts for different services.
c When you offer a few services together for one price.
3 Why does the writer think marketing is similar to magic?
a Because you make sure the customer only looks at what you want them to.
b  Because the customer always wants to know what’s underneath the
packaging.
c Because marketing is similar to a performance.

4 Match the words and phrases in bold in the text to definitions 1–10.
1 search through a long piece of information:
2 confuse:
3 part of the mind which influences your behaviour:
4 no time or interest in doing something:
5 people who copy an idea:
6 to take someone’s attention away from something:
7 reminding people to do something:
8 tricked:
9 small hollow place:
10 forces a liquid through a small gap:

5 Look back at the text and choose three words that you could use in your
day-to-day work.

6 Work with a partner. Discuss these questions.

1 Do you think you are attracted by prices ending in the number 9?
2 What techniques do advertisers use to reach our subconscious?
3 Name one of your favourite brands. What factors would make you stop
buying it?

© Oxford University Press 2017 Business Result Second edition Advanced